Posted inUsed Cars

Used car prices may drop, but not how consumers may expect

As research expects used car prices to drop in 2023, current buyers like Emily Space are skeptical about the difference it will really make on their wallets compared to previous years

“I was seeing cars with 170,000 miles going for over $10,000 and you’re like, ‘What? Like, what is that?,’” Emily Space said.

What You Need To Know

  • Some used car prices are expected to drop in 2023, but the drop won’t be enough to wipe out the surge of prices that started in 2020
  • Auto loan interest rates reached an average of 10% for used vehicles by the end of 2022, deterring many consumers from purchasing higher-priced used vehicles such as trucks and SUVs
  • This caused dealers to lower the prices on more expensive used cars in order to make up for the lack of demand
  • For consumers looking to purchase an inexpensive used car, the demand still exceeds the supply, making the search a little more difficult

When used car prices first began to spike during the COVID-19 pandemic, Space began to work from home and was leasing her previous vehicle

“When my lease was coming to an end, the prices were going to jump $100 to $200 for the same vehicle,” he said. “So that was when I kind of took a step back and realized that maybe a used car was the best way to go.”

But the expected price drop for used vehicles this year isn’t hitting the hardest where consumers expect.

“Where we’re seeing prices coming down are in the more expensive vehicles, you know the 50, 60, $70,000 used vehicles,” said Scott Pundt, the owner of Kalpin’s Express Auto Center. “A lot of its driven by the interest rate, you know, payments on those vehicles interest rate, big impact.”

By the end of 2022, auto loan interest rates will reach an average of 10% for used vehicles, deterring many consumers from purchasing higher-priced used vehicles such as trucks and SUVs. It has caused dealers to have to lower the cost of higher-priced used cars to combat the lack of demand.

“But the lower priced vehicles are still in pretty high demand,” Pundt said. “It’s just once you get into that over 30, 40, $50,000 range, it’s a little more difficult and those prices have come down. Supply and demand basically.”

It’s making buyers like Space have to put in the work to find used cars at lower costs.

“I did a lot of research,” she said. “I went to about five different places, compared all the different pricing to models, as well as mileage was a big thing that I looked at. I think I asked for all of the papers that I could see and they were provided right away.

But for Space, doing the research made the difference because although prices weren’t dropping as quickly as consumers would like, she was still able to find the best option for her.

“I just so happened to stop in here,” she said. “The price was perfect. The mileage was perfect. And it was a no-brainer to go with that instead of unfortunately going with a new car. It just made more sense at this point in time.”